CENVAT credit on business vehicle services allowed under the pre-2011 definition; later exclusion not retrospective, with no suppression.

CENVAT credit on insurance service and authorised service station service used for business vehicles was treated as admissible for the period before 01.04.2011, because the pre-amendment definition of input service was broad enough to cover services used directly or indirectly in relation to manufacture and business activities. The later exclusion introduced from 01.04.2011 was not applied retrospectively to deny credit already earned, and no exclusive personal use was shown. The record also did not support suppression or intent to evade, so the extended period and penalty were not sustainable; the matter was remanded only to verify whether the services were actually availed before 01.04.2011.

---

---

Issues: (i) Whether CENVAT credit on insurance service and authorized service station service used for vehicles deployed in the assessee's business was admissible for the period prior to 01.04.2011 and whether the denial could be sustained on the basis of the post-amendment exclusion under Rule 2(l) of the Cenvat Credit Rules, 2004; (ii) Whether the invocation of the extended period and the imposition of penalty could be sustained.

Issue (i): Whether CENVAT credit on insurance service and authorized service station service used for vehicles deployed in the assessee's business was admissible for the period prior to 01.04.2011 and whether the denial could be sustained on the basis of the post-amendment exclusion under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The services were availed in relation to vehicles used in the course of the assessee's manufacturing and business activities. The pre-01.04.2011 definition of input service had a wide ambit and included services used directly or indirectly in relation to manufacture and activities relating to business. The amendment effective from 01.04.2011 could not be applied retrospectively to deny credit already earned, and the contemporaneous circular also supported this position. The record did not show exclusive personal use so as to bring the services within the exclusion.

Conclusion: The credit was admissible in principle for services availed before 01.04.2011, and the denial could not be sustained on the basis of the later amendment.

Issue (ii): Whether the invocation of the extended period and the imposition of penalty could be sustained.

Analysis: The assessee was a regular assessee, returns were filed routinely, audits were conducted, and the department had information well before issuance of the show cause notice. In these circumstances, the record did not justify an allegation of suppression or intent to evade duty. The matter nevertheless required verification of the factual position regarding the date of availment and utilization of the impugned services.

Conclusion: The extended period and penalty were not sustainable on the facts recorded, but the matter was remanded for limited verification of whether the impugned services were availed before 01.04.2011.

Final Conclusion: The appeals were allowed by way of remand for limited factual verification, with credit after 01.04.2011 not to be allowed if the services were not availed before that date.

Ratio Decidendi: For input services used in business vehicles, the pre-amendment wide definition of input service applies to credits earned before 01.04.2011, and the 01.04.2011 exclusion cannot operate retrospectively; absence of suppression also bars invocation of the extended period.

---